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The Growth Rate of NCAA Coaches Compensation

I subscribe to the Daily Dose at sportsbusinessnews.com (a compilation by Howard Bloom of sports business articles). On 12/24/05, an interesting tidbit on NCAA basketball coaches' compensation appeared there.

When Tom Davis began at Boston College in 1977, he made $12,500 (probably not much here in the way of speaking and apparel contracts). In his last year at Iowa (1999), after a 12 year stint, he made $420,000 (probably inclucing all of the usual extras). By my calculation, after inflating the $12,500 to $34,365 in 1999 dollars, that's a real annual growth rate of 12%. By way of comparison, my compensation has grown at about 3% real annually from 1984 to 2005. And we all know the old rule of thumb about 3% real annual growth in the economy at large.

Another tidibit: Tom Delaney states that Dean Smith made about $33,000 in 1968 (when Delaney was a player there; how he knows Smith's compensation isn't clearly stated). The current compensation of top coaches, as Smith would undoubtedly be, is in the $2 million range. Inflating to 2005, Smith's $33,000 becomes $102,866. This yields an annual real growth rate of "only" 8%. Again, this is over twice the typical growth rate in the economy.

Two things seem interesting here to me. First, these are clear indications of the rate of growth in revenues in college sports (via MRP theory) and the rate of growth in importance of the other values that college coaches bring to their sports programs and universities. Second, since players cannot be paid, these amounts also are indicative of fairly sizable rents accruing to coaches. I've argued elsewhere how across-the-board taxes on the rent portion could probably fund at least gender equity.

Nice work if you can get it.